SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 1, 1996
ATLANTIC BEVERAGE COMPANY, INC.
(Exact name of registrant as specified in its
charter)
Delaware 0-22614 36-3761400
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
incorporation or organization)
1587 Sulphur Spring Road
Baltimore, Maryland
(Address of principal executive offices)
21227
(Zip Code)
(410) 247-5857
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
Exhibit Index is on page 6.
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
GENERALLY
In August of 1996, Atlantic Beverage Company, Inc. (the "Company") and
a newly-formed, wholly-owned subsidiary of the Company acquired certain of the
assets of Richards Cajun Country Food Processors ("Richards"). Richards, based
in Churchpoint, Louisiana, is engaged in the manufacturing, marketing and
distribution of Cajun-style processed meat and specialty food products.
THE RICHARDS ACQUISITION
Under the terms of the Asset Purchase Agreement executed on August 1,
1996, among Richards Cajun Foods Corp. ("Cajun Foods"), the Company, as the
capital stock owner of Cajun Foods and J.L. Richard, the Company acquired all of
the outstanding capital stock of Richards. The purchase price for these assets
was approximately $3.4 million, which included cash paid at closing in the
amount of $2.5 million and a subordinated promissory note in the amount of $0.85
million. In connection with these transactions and the financing thereof, the
Company incurred transaction costs of approximately $0.3 million, which will be
reflected as an asset on the Company's balance sheet.
FUNDING OF THE ACQUISITION
In funding the $2.5 million cash portion of the Richards transaction,
the Company used approximately $0.8 million of existing cash balances and
approximately $0.3 million of additional borrowings under a prior term loan and
revolving line of credit agreement with the LaSalle National Bank, as well as
obtained additional term debt from LaSalle National Bank in the amount of $1.4
million.
-2-
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
The following financial statements are being filed as
part of this report:
(i) Financial Statement of Business Acquired:
(A) Audited Year-End Financial
Statements:
Report of Independent Public
Accountants
Balance Sheets--as of December 31,
1994 and 1995
Statements of Income--for the years
ended December 31, 1993, 1994 and
1995
Statements of Changes in Owner's
Capital--for the years ended
December 31, 1993, 1994 and 1995
Statements of Cash Flows--for the
years ended December 31, 1993, 1994
and 1995
Notes to Financial Statements
December 31, 1994 and 1995
(B) Unaudited Interim Financial
Statements:
Balance Sheets--as of March 31, 1996
Statements of Income--for the years
ended March 31, 1995 and 1996
Statements of Cash Flows--for the
years ended March 31, 1995 and 1996
Notes to Financial Statements March
31, 1995 and 1996
(ii) Financial Statements of Acquiring Business
Pro Forma Consolidated Financial
Data
Atlantic Beverage Company, Inc. Pro
Forma Consolidating Balance Sheets
as of March 31, 1996 (Unaudited)
Atlantic Beverage Company, Inc. Pro
Forma Consolidated Statement of
Operations for the Year Ended
December 31, 1995 (Unaudited)
Atlantic Beverage Company, Inc. Pro
Forma Consolidated Statement of
Operations for the Quarter Ended
March 31, 1996(Unaudited)
-3-
(b) Exhibits
The following Exhibits are filed herewith
Number Title
2.08 Asset Purchase Agreement dated
August 1, 1996 among Cajun Foods, as
Purchaser, the Company, as owner of
the capital stock of Cajun Foods,
and J.L. Richard, as Seller.
2.09 First Amendment to Loan and Security
Agreement dated as of August 1, 1996
among the Company, Carlton Foods
Corp. and Prefco Corp., as
Borrowers, and LaSalle National
Bank, as the Lender.
2.10 Warranty Bill of Sale and Assignment
dated August 1, 1996 among J.L.
Richard and Donna Marie Richard, as
Seller, and Cajun Foods as,
Purchaser.
2.11 Authorization of Inspection dated
August 1, 1996 among J.L. Richard
and the Company.
2.12 Assignment dated August 1, 1996
among J.L. Richard, as Assignor, and
Cajun Foods, as Assignee.
2.13 Assignment dated August 1, 1996
among Donna Marie Richard, as
Assignor, and Cajun Foods, as
Assignee.
-4-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ATLANTIC BEVERAGE COMPANY, INC.
Dated: August 12, 1996 By: /s/ Merrick M. Elfman
--------------------------
Merrick M. Elfman, Chairman of the Board
-5-
INDEX TO FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENT DESCRIPTION
PAGE
Financial Statement of Business Acquired:
(A) Audited Year-End Financial Statements:
Report of Independent Public Accountants F-1
Balance Sheets--as of December 31, 1994 and 1995 F-2
Statements of Income--for the years ended December 31, 1993, 1994
and 1995 F-3
Statements of Changes in Owner's Capital--for the years ended
December 31, 1993, 1994 and 1995 F-4
Statements of Cash Flows--for the years ended December 31, 1993,
1994 and 1995 F-5
Notes to Financial Statements December 31, 1994 and 1995 F-6
(B) Unaudited Interim Financial Statements:
Balance Sheets--as of March 31, 1996 F-8
Statements of Income--for the years ended March 31, 1995
and 1996 F-9
Statements of Cash Flows--for the years ended March 31,
1995 and 1996 F-10
Notes to Financial Statements March 31, 1995 and 1996 F-11
Financial Statements of Acquiring Business
Pro Forma Consolidated Financial Data F-13
Atlantic Beverage Company, Inc. Pro Forma Consolidating Balance Sheets
as of March 31, 1996 (Unaudited) F-14
Atlantic Beverage Company, Inc. Pro Forma Consolidated Statement of
Operations for the Year Ended December 31, 1995 (Unaudited) F-16
Atlantic Beverage Company, Inc. Pro Forma Consolidated Statement of Operations
for the Quarter Ended March 31, 1996 (Unaudited) F-17
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
2.08 Asset Purchase Agreement dated August 1, 1996 among Cajun Foods, as Purchaser, the
Company, as owner of the capital stock of Cajun Foods, and J.L. Richard, as Seller. 7
2.09 First Amendment to Loan and Security Agreement dated as of August 1, 1996 among the
Company, Carlton Foods Corp. and Prefco Corp., as Borrowers, and LaSalle National Bank,
as the Lender. 55
2.10 Warranty Bill of Sale and Assignment dated August 1, 1996 among J.L. Richard and Donna
Marie Richard, as Seller, and Cajun Foods, as Purchaser. 90
2.11 Authorization of Inspection dated August 1, 1996 among J.L. Richard and the Company.
95
2.12 Assignment dated August 1, 1996 among J.L. Richard, as Assignor, and Cajun Foods, as
Assignee. 96
2.13 Assignment dated August 1, 1996 among Donna Marie Richard, as Assignor, and Cajun Foods,
as Assignee. 99
-6-
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Owner of
Richard's Cajun Country Food Processors:
We have audited the accompanying balance sheets of Richard's Cajun Country Food
Processors (a Louisiana sole proprietorship) as of December 31, 1994 and 1995,
and the related statements of income, changes in owner's capital and cash flows
for the years ended December 31, 1993, 1994 and 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Richard's Cajun Country Food
Processors as of December 31, 1994 and 1995, and the results of its operations
and its cash flows for the years ended December 31, 1993, 1994 and 1995, in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
Baltimore, Maryland,
May 17, 1996 (except with respect to
the matter discussed in
Note 5, as to which the
date is August 1, 1996)
F-1
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
BALANCE SHEETS
AS OF DECEMBER 31, 1994 AND 1995
1994 1995
--------------- ----------
ASSETS
CURRENT ASSETS:
Cash (Note 4) $ 543,474 $ 323,856
Accounts receivable 114,373 110,860
Inventory (Notes 1 and 2) 48,968 62,620
-------------- --------------
Total current assets 706,815 497,336
PROPERTY, PLANT AND EQUIPMENT, net (Notes 1 and 2) 327,682 304,173
-------------- --------------
Total Assets $ 1,034,497 $ 801,509
============== ==============
LIABILITIES AND OWNER'S CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 8,653 $ 32,727
Accrued expenses 12,304 12,070
-------------- --------------
Total Liabilities 20,957 44,797
OWNER'S CAPITAL 1,013,540 756,712
-------------- --------------
Total Liabilities and Owner's Capital $ 1,034,497 $ 801,509
============== ==============
The accompanying notes are an integral part of these balance sheets.
F-2
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
1993 1994 1995
--------------- --------------- ----------
NET SALES (Note 1) $ 3,235,228 $ 3,330,016 $ 3,377,076
COST OF GOODS SOLD, exclusive of depreciation
shown below 2,255,561 2,130,259 2,240,328
-------------- -------------- --------------
Gross profit 979,667 1,199,757 1,136,748
-------------- -------------- --------------
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES:
Salaries and benefits 162,412 161,388 155,698
Other operating expenses 100,154 125,002 123,021
Depreciation (Notes 1 and 2) 89,294 70,367 60,797
-------------- -------------- --------------
Total selling, general and administrative
expenses 351,860 356,757 339,516
-------------- -------------- --------------
Income from operations 627,807 843,000 797,232
INTEREST INCOME 7,669 9,217 10,462
-------------- -------------- --------------
NET INCOME $ 635,476 $ 852,217 $ 807,694
============== ============== ==============
The accompanying notes are an integral part of these statements.
F-3
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
STATEMENTS OF CHANGES IN OWNER'S CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
BALANCE, December 31, 1992 $ 770,304
Net income 635,476
Distributions to owner (600,736)
--------------
BALANCE, December 31, 1993 805,044
Net income 852,217
Distributions to owner (643,721)
--------------
BALANCE, December 31, 1994 1,013,540
Net income 807,694
Distributions to owner (1,064,522)
--------------
BALANCE, December 31, 1995 $ 756,712
==============
The accompanying notes are an integral part of these statements.
F-4
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
1993 1994 1995
--------------- --------------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 635,476 $ 852,217 $ 807,694
Adjustments to reconcile net income to cash
flows provided by operating activities-
Depreciation 89,294 70,367 60,797
(Increase) decrease in accounts receivable (22,470) 4,384 3,513
(Increase) decrease in inventory (8,048) 4,359 (13,652)
(Decrease) increase in accounts payable (7,071) (3,056) 24,074
Increase (decrease) in accrued expenses 3,103 (2,718) (234)
-------------- -------------- --------------
Net cash flows provided by operating activities 690,284 925,553 882,192
-------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment (85,308) (15,393) (37,288)
-------------- -------------- --------------
Net cash flows used in investing activities (85,308) (15,393) (37,288)
-------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to owner (600,736) (643,721) (1,064,522)
-------------- -------------- --------------
Net cash used in financing activities (600,736) (643,721) (1,064,522)
-------------- -------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 4,240 266,439 (219,618)
CASH, beginning of period 272,795 277,035 543,474
-------------- -------------- --------------
CASH, end of period $ 277,035 $ 543,474 $ 323,856
============== ============== ==============
The accompanying notes are an integral part of these statements.
F-5
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1995
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying financial statements present the accounts of Richard's Cajun
Country Food Processors ("Richard's" or "the Company"), a wholesale processor
and distributor of meat products, primarily in Louisiana and the surrounding
area.
Revenue Recognition
The Company records sales when product is delivered to the customers.
Inventory
Inventory is stated at the lower of cost or market and is comprised primarily of
packaged meat products, raw materials to be processed and packaging supplies.
Cost is determined using the first-in, first-out (FIFO) method.
Property, Plant and Equipment
Property, Plant and Equipment consists of land, buildings and building
improvements, office and warehouse equipment and delivery vehicles and is stated
at cost. Depreciation on buildings and building improvements is provided for on
the straight-line method over 15 to 31.5 years. Depreciation on office and
warehouse equipment and delivery vehicles is provided for on the double
declining balance method over five year and seven year estimated useful lives of
the assets.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues, expenses, gains
and losses during the reporting periods. Actual results could differ from these
estimates.
Income Taxes
Richard's is a sole proprietorship and, as such, Richard's taxable income or
loss for the periods was included in the individual income tax returns of its
owner for federal and state income tax purposes. As a result, no provision for
income taxes has been included in the accompanying statements of income.
2. INVENTORY:
Inventories consisted of the following as of December 31:
F-6
1994 1995
---------------- ----------
Raw materials $ 18,389 $ 30,022
Finished products 12,676 12,290
Supplies 17,903 20,308
-------------- --------------
Total $ 48,968 $ 62,620
============== ==============
3. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consisted of the following as of December 31:
1994 1995
---------------- ---------------
Land $ 16,000 $ 16,000
Buildings and improvements 346,683 347,017
Furniture and equipment 427,629 462,719
Vehicles 143,967 145,831
-------------- --------------
934,279 971,567
Less - Accumulated depreciation (606,597) (667,394)
-------------- --------------
Property, plant and equipment, net $ 327,682 $ 304,173
============== ==============
4. LETTER OF CREDIT:
Richard's maintains a standby letter of credit for one of its suppliers to
provide collateral for inventory purchases. As of December 31, 1995, total funds
committed for this letter of credit amounted to $20,000. No funds were drawn
down at December 31, 1995, on this letter of credit.
5. SUBSEQUENT EVENT:
On August 1, 1996, substantially all of the assets and liabilities of Richard's
were acquired by a wholly-owned subsidiary of Atlantic Beverage Company, Inc. As
a result, a new basis of accounting was established. In connection with this
acquisition, the sole owner of Richard's (the Seller) has entered into a 3-year
employment agreement for $50,000 per year. The Seller will be primarily
responsible for sales and marketing of the operations. The accompanying
statements of income do not include compensation expense of the owner.
F-7
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
BALANCE SHEET
AS OF MARCH 31, 1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 398,711
Accounts receivable 97,623
Inventory 112,235
Prepaids 12,460
--------------
Total current assets 621,029
PROPERTY, PLANT AND EQUIPMENT, net 300,008
--------------
Total Assets $ 921,037
==============
LIABILITIES AND OWNER'S CAPITAL
CURRENT LIABILITIES:
Accounts payable 9,897
Accrued expenses 12,633
--------------
Total Liabilities 22,530
OWNER'S CAPITAL 898,507
Total Liabilities and Owner's Capital $ 921,037
==============
The accompanying notes are an integral part of this balance sheet.
F-8
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996
(Unaudited)
1995 1996
-------------- --------------
NET SALES $ 838,476 $ 909,177
COST OF GOODS SOLD, exclusive of depreciation
shown below 551,712 553,885
-------------- --------------
Gross profit 286,764 355,292
-------------- --------------
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES:
Salaries 42,645 40,501
Other operating expenses 29,142 25,365
Depreciation 10,095 9,900
-------------- --------------
Total selling, general and administrative
expenses 81,882 75,766
-------------- --------------
Income from operations 204,882 279,526
INTEREST INCOME 3,263 2,405
-------------- --------------
NET INCOME $ 208,145 $ 281,931
============== ==============
The accompanying notes are an integral part of these statements.
F-9
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996
(Unaudited)
1995 1996
------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 208,145 $ 281,931
Adjustments to reconcile net income to cash
flows provided by operating activities-
Depreciation 10,095 9,900
Decrease in accounts receivable, net 17,091 13,237
Decrease (increase) in inventory 22,215 (49,615)
Increase in prepaids (12,526) (12,460)
Increase (decrease) in accounts payable 2,706 (22,830)
Increase in accrued expenses 786 563
-------------- --------------
Net cash flows provided by operating activities 248,512 220,726
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (3,066) (5,735)
-------------- --------------
Net cash flows used in investing activities (3,066) (5,735)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to owner (196,600) (140,136)
-------------- --------------
Net cash flows used in financing activities (196,600) (140,136)
-------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 48,846 74,855
CASH, beginning of period 543,474 323,856
-------------- --------------
CASH, end of period $ 592,320 $ 398,711
============== ==============
The accompanying notes are an integral part of these statements.
F-10
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995 AND 1996
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying financial statements present the accounts of Richard's Cajun
Country Food Processors ("Richard's" or "the Company"), a wholesale processor
and distributor of meat products, primarily in Louisiana and the surrounding
area.
Revenue Recognition
The Company records sales when product is delivered to the customers.
Inventory
Inventory is stated at the lower of cost or market and is comprised primarily of
packaged meat products, raw materials to be processed and packaging supplies.
Cost is determined using the first-in, first-out (FIFO) method.
Property, Plant and Equipment
Property, Plant and Equipment consists of land, buildings and building
improvements, office and warehouse equipment and delivery vehicles and is stated
at cost. Depreciation on buildings and building improvements is provided for on
the straight-line method over 15 to 31.5 years. Depreciation on office and
warehouse equipment and delivery vehicles is provided for on the double
declining balance method over five year and seven year estimated useful lives of
the assets.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues, expenses, gains
and losses during the reporting periods. Actual results could differ from these
estimates.
Income Taxes
Richard's is a sole proprietorship and, as such, Richard's taxable income or
loss for the periods was included in the individual income tax returns of its
owner for federal and state income tax purposes. As a result, no provision for
income taxes has been included in the accompanying statements of income.
2. INVENTORY:
Inventories consisted of the following as of December 31, 1995, and March 31,
1996:
F-11
December 31, March 31,
1995 1996
(Unaudited)
Raw materials $ 30,022 $ 53,873
Finished products 12,290 22,447
Supplies 20,308 35,915
-------------- --------------
Total $ 62,620 $ 112,235
============== ==============
3. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consisted of the following as of December 31,
1995, and March 31, 1996:
December 31, March 31,
1995 1996
(Unaudited)
Land $ 16,000 $ 16,000
Buildings and improvements 347,017 347,017
Furniture and equipment 462,719 468,454
Vehicles 145,831 155,809
-------------- --------------
971,567 987,280
Less - Accumulated depreciation (667,394) (687,272)
-------------- --------------
Property, plant and equipment, net $ 304,173 $ 300,008
============== ==============
4. LETTER OF CREDIT:
Richard's maintains a standby letter of credit for one of its suppliers to
provide collateral for inventory purchases. As of March 31, 1996, total funds
committed for this letter of credit amounted to $20,000. No funds were drawn
down at March 31, 1996, on this letter of credit.
5. SUBSEQUENT EVENT:
On August 1, 1996, substantially all of the assets and liabilities of Richard's
were acquired by a wholly-owned subsidiary of Atlantic Beverage Company, Inc. As
a result, a new basis of accounting was established. In connection with this
acquisition, the sole owner of Richard's (the Seller) has entered into a 3-year
employment agreement for $50,000 per year. The Seller will be primarily
responsible for sales and marketing of the operations. The accompanying
statements of income do not include compensation expense of the owner.
F-12
PRO FORMA CONSOLIDATED FINANCIAL DATA
The following Pro Forma Consolidated Financial Data includes
the unaudited Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1995, the unaudited Pro Forma Consolidated Statement of Operations
for the quarter ended March 31, 1996, and the unaudited Pro Forma Consolidated
Balance Sheet as of March 31, 1996. The unaudited Pro Forma Consolidated
Statement of Operations for the year ended December 31, 1995 and the quarter
ended March 31, 1996 and the unaudited Pro Forma Consolidated Balance Sheet as
of March 31, 1996 are adjusted to give effect to (i) the consummation of the
acquisition of the net assets of Richard's Cajun Country Food Processors
(Richard's), (ii) the incurrence of revolver and term debt in amounts sufficient
to complete the transactions described in (i) above, as if such transaction had
occurred on January 1, 1995 for the unaudited Pro Forma Consolidated Statement
of Operations for the year ended December 31, 1995, and for the quarter ended
March 31, 1996; and as of March 31, 1996 for the unaudited Pro Forma
Consolidated Balance Sheet as of March 31, 1996.
The pro forma adjustments are based upon available information
and certain assumptions that the Company believes are reasonable. The Pro Forma
Consolidated Financial Data should be read in conjunction with the Company's
Financial Statements and related notes thereto and the financial statements and
related notes of Richard's Cajun Country Food Processors. The unaudited Pro
Forma Consolidated Financial Data do not purport to represent what the Company's
results of operations or financial position would have been had any of the above
events occurred on January 1, 1995 or January 1, 1996 or to project the
Company's results of operations or financial position for or at any future
period or date.
F-13
ATLANTIC BEVERAGE COMPANY, INC.
CONSOLIDATING PRO FORMA BALANCE SHEETS
AS OF MARCH 31, 1996
(UNAUDITED)
The Company Richard's Pro Forma Pro Forma
(Historical) (Historical) Adjustments Consolidated
---------------- -------------- ---------------- ----------------
Cash $ 415,538 $ 398,711 $ (398,711) (a) $ 415,538
Short term invesments 1,120,956 - (820,000) (b) 300,956
Accounts receivable 6,657,167 97,623 6,754,790
Inventory 2,631,166 112,235 2,743,401
Prepaid expenses 353,376 12,460 365,836
---------------- -------------- ---------------- ----------------
Total Current Assets 11,178,203 621,029 (1,218,711) 10,580,521
Property, plant and equipment, net 2,086,369 300,008 699,992 (c) 3,086,369
Noncompete Agreement, net 106,000 - 106,000
Deferred tax asset, net 365,000 - 365,000
Goodwill, net 8,838,089 - 2,390,000 (d) 11,228,089
Cash surrender value of life insurance - - -
Other assets, net 644,228 - 50,000 (e) 694,228
---------------- -------------- ---------------- ----------------
Total Assets 23,217,889 921,037 1,921,281 26,060,207
================ ============== ================ ================
Bank overdraft 2,748,117 - 2,748,117
Line of credit 2,729,992 - 530,000 (f) 3,259,992
Current portion of notes payable 804,776 804,776
Accounts payable 5,556,789 9,897 5,566,686
Accrued expenses 810,570 12,633 823,203
Net current liabilities of discontinued
operations 264,646 - 264,646
Current portion of obligations under capital
lease - - -
---------------- -------------- ---------------- ----------------
Total Current Liabilities 12,914,890 22,530 530,000 13,467,420
Obligations under capital lease, net of current
portion 140,818 - 140,818
Long-term debt, net of current portion 5,443,813 - 2,289,788 (g) 7,733,601
Deferred tax liability 167,000 - 167,000
---------------- -------------- ---------------- ----------------
Total liabilities 18,666,521 22,530 2,819,788 21,508,839
Stockholders' Equity:
Preferred stock - - -
Series A nonvoting preferred stock - - -
Common stock 61,490 - 61,490
Additional paid-in-capital 8,772,701 - 8,772,701
Owner's Capital - 898,507 (898,507) (h) -
Retained earnings (Accumulated
deficit) (3,855,753) - (3,855,753)
Treasury stock (427,070) - (427,070)
---------------- -------------- ---------------- ----------------
Total Equity 4,551,368 898,507 (898,507) 4,551,368
Total Liabilities and Stockholders' Equity $23,217,889 $ 921,037 $1,921,281 $ 26,060,207
================ ============== ================ ================
F-14
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEETS
(a) To eliminate cash not acquired by Atlantic Beverage Company, Inc.
(b) To reflect cash to be paid to the seller of Richard's from excess cash
of the Company.
(c) To reflect adjustment to record property, plant and equipment at
estimated fair value.
(d) To record goodwill related to the acquisition of Richard's calculated
as follows:
Total Purchase Price $ 3,389,788
Transaction costs related to purchase 200,000
Net assets acquired (1,199,788)
------------
Goodwill $ 2,390,000
(e) Estimated financing costs to be deferred and amortized over the term of
the debt.
(f) To reflect line of credit utilization to fund acquisition.
(g) To record debt borrowed in connection with Richard's acquisition
calculated as follows:
New term debt $1,400,000
Note payable to seller of Richard's 889,788
$2,289,788
(h) Elimination of seller's equity in connection with the acquisition of
Richard's.
F-15
ATLANTIC BEVERAGE COMPANY, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1996
(UNAUDITED)
The Company Richard's Pro Forma Pro Forma
(Historical) (Historical) Adjustments Consolidated
------------------ --------------- ---------------- ----------------
Net Sales $ 34,215,448 $ 909,177 $ 35,124,625
Cost of goods sold 30,208,117 553,885 30,762,002
------------------ --------------- ----------------
Gross Profit 4,007,331 355,292 4,362,623
Selling, general and administrative:
Salaries and benefits 1,791,905 40,501 14,000 (a) 1,846,406
Other operating expense 1,869,787 25,365 1,895,152
Depreciation and amortization 233,207 9,900 14,938 (b) 258,045
Management and consulting fees - - 12,500 (c) 12,500
------------------ --------------- ---------------- ----------------
Total selling, general and
administrative 3,894,899 75,766 41,438 4,012,103
Income(loss) from operations 112,432 279,526 (41,438) 350,520
Other Income (Expenses):
Interest expense (277,464) - (65,945) (d) (343,409)
Interest income - 2,405 2,405
Other 388,387 - 388,387
------------------ --------------- ---------------- ----------------
Income (loss) before income tax
provision 223,355 281,931 (107,383) 397,903
Income tax provision
------------------ --------------- ---------------- ----------------
Net (loss) income from continuing
operations $ 223,355 $ 281,931 $ (107,383) $ 397,903
================== =============== ================ ================
F-16
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(a) To reflect difference of pre- and post- acquisition salaries and
benefits of the former owner of Richard's in accordance with an employment
agreement.
(b) To reflect amortization expense on acquisition goodwill, as calculated
below:
Acquisition goodwill $2,390,000
Amortization period 40
----------------
Annual amortization 59,750
4
----------------
Quarterly amortization 14,938
(c) To record management fees to be paid to Sterling Capital in accordance
with a management agreement.
(d) To record interest expense on acquisition financing as follows:
Interest expense on new debt $253,781
Amortization of deferred
financing costs of $50,000, to be
amortized over 5 years 10,000
----------------
Annual amortization 263,781
4
----------------
Quarterly amortization 65,945